Microsoft Argues that Third-Party Peripherals are Illegal

Despite its newness to the entertainment field, the video game industry is no stranger to copyright litigation. The staggering number of moving parts that go into the average game means that every time a consumer fires up a game, he’s navigating a complex tangle of copyright, patent, and trademark rights. Add to that DMCA’s  prohibition against circumventing digital protection measures on copyrighted work, and you’ve got a proverbial minefield of liability.

The recent legal storm between Microsoft and Datel underscores just this problem. Datel produces third-party accessories for every major video game console, including Microsoft’s Xbox 360. Among Datel's products Datel are memory cards, controllers, replacement and supplemental hard-drives, and transfer kits that allow players to back up their save files and other personal data on their PC’s hard drive.

In October 2009, Microsoft released a mandatory update for the Xbox 360 operating system. Among other features, this update locked out all third-party accessories, rendering any content stored on them useless. Datel sued, claiming that Microsoft’s lock-out granted them an illegal monopoly on Xbox accessories.

Microsoft tried to have the case dismissed. When that failed, it counter-sued, claiming (among other things) trademark infringement and violation of the anti-circumvention provisions of the 1998 Digital Millennium Copyright Act.  According to Microsoft, Datel’s products (and, in fact, all third-party products) violate the DMCA by circumventing the authentication algorithm and connecting to the console. Microsoft goes even further to claim that, by allowing players to save their games on a non-Microsoft-branded memory card, these third-party products “enable the piracy of video games.”

According to Microsoft, a save game file, itself a bookmark of a player’s in-game progress, is as copyrightable as the underlying game. Undeterred by the obvious wrinkle that a save game is both unplayable by itself, and little more than a glorified text file without a copy of the associated game, Microsoft charged forward with a series of sweeping copyright assertions. Some of the highlights include:

  • Microsoft asserts that completely unlocking the advertised features of a game without explicit permission from the game’s publishers is copyright infringement – even if you’ve legally purchased the game. Microsoft doesn’t clarify what they consider to be “explicit” permission. In any case, this argument amounts to a publisher telling a reader that they can’t skip to the last chapter in a book that they’ve legally purchased – an absurdity no matter how you slice it.)
  • Users “access” the game not through their console, but through their peripheral devices. When you consider that many aspects of a game can be accessed without any user input (simply booting up the console with a disc in the drive will cause the game to load, including opening cinematics and the main menu) this argument begins to waver. Microsoft takes it a step further, by saying that these peripherals, as the points of access, must be approved by them for consumer use. In practice, this is akin to saying I need an Adobe-approved mouse to use Photoshop.
  • Save games are copyrightable because they contain information about “what goes where in a level… [and] location, appearance, and status of hundreds or thousands of persons and objects.” However, these save files are both unnecessary to gameplay (you can reach the same game state simply by playing through without saving) and have no value independent of the game they reference.
  • Xbox owners might notice that the front of their console contains not one, but two perfectly standard USB ports. Although these were ostensibly included as ports for charging controllers, in 2010 Microsoft began to allow users to back up their data onto generic USB drives. Microsoft defended its decision by citing its introduction of a “new game container format” which “prevents circumvention under the DMCA.” Nevertheless, the decision to allow generic, unbranded peripherals runs directly contrary to its stated position that third-party peripherals enable piracy.

Public Knowledge joined a brief filed by the Electronic Frontier Foundation opposing Microsoft’s claims. That brief covers a number of arguments about Microsoft’s misapplication of the DMCA, and the possible ramifications.

First, such an overbroad application of copyright law would stifle innovation and impair the ability of legitimate, paying consumers to use their purchased goods as advertised. It would allow manufacturers to control not only the market for their own products, but for all compatible accessories. Legal acknowledgment of a manufacturer’s ability to restrict interoperable accessories for their products means that Apple could demand that only their in-house earbuds are allowed for use on an iPod, or Dell desktops that only recognize Dell mice and Dell monitors.

Microsoft’s arguments are also based on a flawed understanding of the law. The brief argues that customers receive at purchase the authority to circumvent the digital protection measures on their products, to the extent necessary to use those products as advertised. This means that a user receives the implied authority to unlock his game to the extent necessary to play it, and the authority to circumvent Microsoft’s authentication code to the extent necessary to make his system operable. Microsoft bears the burden of proving that consumers were denied the authority to perform this basic unlocking of their products at purchase. Moreover, the doctrine of exhaustion (also known as “first-sale” doctrine) limits sellers' rights to allow for flexibility in downstream markets.

The brief also argues that Microsoft’s position constitutes a misuse of copyright law in an attempt to extend its own legal rights beyond those recognized by the law. Microsoft’s interpretation of copyright law and the DMCA would grant it protection akin to patent rights, which are both stronger and more exclusive. It would also allow them unilateral control over the market for peripherals and accessories for their console.

Microsoft’s counter-claims have the possibility to change the legal standards that govern third-party peripherals not only in the video game industry, but in technology generally. The suit is not scheduled to go before a jury until May 2012. In the interim, Public Knowledge and EFF will be watching to see that Microsoft’s DMCA claims do not go unchallenged.

The Latest